SLCM Practical Questions

Question 1
Rakesh has invested Rs. 20,000 in PQR Mutual Fund with entry load 1%. Find out the Net
Asset Value if the number of units purchased was 100.
Answer:
Question 2
Pritam is holding SALORA Mutual Fund units. He sold all the units at a NAV of Rs. 120
with exit load of 1%. He received Rs. 52,000. Find the number of units sold by Pritam.

Answer
Question 3
X, a shareholder of a listed company holding 1,000 equity shares of Rs. 100 each on 1st
January, 2019 in physical form, wants to transfer to another shareholder Y on 1st May,
2019. X is also holding Commercial Paper & Certificate of Deposits of Rs. 50,000 & Rs.
20,000 respectively. As a Company Secretary of the company, write a note on :
Whether X can transfer his shares to Y in physical form ?

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Question 4:
ABC Company Ltd. Had issued 2000 equity shares of Rs. 80 each with attachable warrant
on 20th June, 2018. The warrant can be exchanged in equity in the proportion of 1 : 1. S,
a shareholder who was allotted 200 equity shares with attachable warrant on 20th June,
2018 wants to know the warrant premium if the market value of warrant is Rs.18 and
exercise price is Rs.70.
Calculate the warrant premium for S.

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Question 5
Suppose B. Co. Ltd. issues bonds with following terms:
Issue price of Bond Rs. 2000
Coupon rate 2% with maturity period of 2 years
Convertible into equity shares @ Rs. 100 per share
Y has subscribed for 5 bonds and made an investment of Rs. 10,000. On maturity date,
investor will have an option to either claim full redemption amount or convert the Bonds
into equity @ Rs. 100 per share. The quoted share price on maturity date is Rs. 150. If he
goes for conversion how many shares Y will get? Will it be fair enough if he opts for
redemption value ? Calculate which option is best suitable to Y ?

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Question 6:
Ris holding 2000 units of an equity-oriented scheme of a mutual fund and 1000 units of
a debt scheme of a mutual fund. On 7th June, 2020 he is interested to redeem these units.
Prevailing net asset value (NAV) of these units are as under :

Net Asset Value (NAV)

Date Equity-oriented scheme (in
Debt scheme (in Rs. )
Rs. )
6th June 45 35
7th June 46 34
8th June 47 33

He makes an application for redemption of above units on 7th June, 2020 at 2:30 pm.
Based on given information answer the following :
(i) What will be the applicable NAV in his case ?
(ii) What will be applicable NAV if application for redemption is made at 3:15 pm ?
Answer:
Question 7
From the given information, calculate the Enterprise value of KRS Ltd. :
Outstanding equity share capital Rs. 1,600 lakh (par value per share Rs. 2)
Market price per share on closing date (equity share) : Rs. 125
Reserves & Surplus Rs. 195 lakh,
Minority interest Rs. 275 lakh,
Preference share capital Rs. 4,200 lakh,
Cash-in-hand Rs. 72 lakh,
Cash equivalent Rs. 63 lakh,
Other current assets Rs. 1,965 lakh.

Answer:
Question 8
Portable Marketing Ltd., a listed company on stock exchange, having paid up capital Rs.
500 crore consisting of 50 crore equity share of Rs. 10 each. The Board of directors of
company has recommended issuing of sweat equity shares to its promoters/directors
and employees as a part of their recognition for valuable contribution to the growth of
company. The board meeting was held on 1st March, 2020 and EGM was held on 27th
March, 2020 for approving the issue of sweat equity shares. The details of closing market
price available on stock exchange are given below :

preceding 31st January,

The average of the weekly high and low of closing 2020 Rs. 540
prices of equity shares of the company during 6
months preceding 26th February,
Rs. 550
2020
preceding the 31st January,
The average of the weekly high and low of the 2020 Rs. 580
closing prices of equity shares of the company
during the two weeks preceding the 26th
Rs. 575
February, 2020

The closing price of equity share of the company on 27th March, 2020 Rs. 578

Referring to the provisions of Companies Act, 2013 and SEBI Regulations, answer the
following :
(i) What are the conditions to be fulfilled for issue of sweat equity shares ?
(ii) Can sweat equity shares be issued to promoters ? If yes, what are the conditions
to be fulfilled ?
(iii) What is the relevant date in above case ?
(iv) What should be the minimum price at which sweat equity shares should be
issued ?

Answer:
Question 9
Aruna Steel Ltd. Issued Bonds with the following terms:
Issue price of the Bond : Rs. 1000
Coupon rate : 3%
Maturity : 5 years
Convertible into equity shares @ Rs. 500 per share
Ivan had purchased 20 bonds. At the time of maturity, the market price of the equity
shares was Rs. 400.
What are the options available to Ivan on the maturity date and which option he should
prefer?

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Question 10
Good Luck Finance Ltd., a listed company issued 20 lakh equity shares of Rs. 180 each.
The Company provided Green Shoe Option and Nishan was nominated as Stabilising
Agent.
On the date of listing, Corona Virus threat spread across the globe. Consequently post
listing, the share price of the company fall to Rs. 150. From the above :
i. Compute the quantum of shares that can be bought by Nishan.
ii. State the provisions for balance of shares lying in the special account for Green
Shoe Option.

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Question 11
ABC Limited, a public company, has come with public issue of 15,00,000 equity shares
through a book building process. The price band is Rs. 500 - Rs. 600. The following table
shows demand of securities at various price levels. What should be the cut-off price as
per book building mechanism?

Bid Price No. of Investors Demand (No. of Shares)

520 25 8,50,000
530 10 4,00,000
535 15 2,00,000
545 4 4,00,000
560 6 1,00,000
575 5 2,00,000
585 3 1,10,000
590 3 1,40,000
595 3 3,50,000
600 1 7,00,000
75 34,50,000

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Question 12
Akshay buys 500 shares of PQR Limited @ Rs. 210 per share on the stock exchange
platform. In order to hedge the position, he sells 300 futures of PQR Limited @ Rs. 195
each. Due to fall in the share and futures price by 5% and 3% respectively on next day,
Akshay closes his position by counter transactions. Find out his profit or loss.

Answer:
Question 13
The information relating to one Equity Oriented Mutual Fund is given below:
As on 2nd Jan 2019 As on 3rd Jan 2019
Market value of the fund portfolio 19300 19800
Receivables 200 200
Other Accrued Income 150 150
Accrued Expenses 50 50
Other payables 100 100
Units of Mutual Funds 500 500
Fund Value per unit = Rs. 10
You are required to calculate :
(i) NAV of the fund on 2nd January, 2019 and 3rd January, 2019.
(ii) Ramesh invested Rs.1,95,000 in this Fund on 2nd January, 2019 at 02:00 PM, through
Internet Banking Payment System.
Calculate the number of mutual fund units allotted to him.
Assume that there is no transaction cost.

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Question 14
Romeo International Limited, an Indian public limited company, is listed on BSE. On
Friday i.e. 14th December, 2018 one of the shareholders of the Company, Ganesh, who
was already holding 30% stake in the company, made a public announcement for an open
offer for the acquisition of 13 crore equity shares (Face value Rs.10 each), constituting
26% of the equity share capital of the Romeo International Limited. The offer price per
share according to Takeover Regulations is arrived at Rs.500 per share.
Explain the following with reference to SEBI (Substantial Acquisition of Shares and
Takeovers) Regulations, 2011:
i. What is the time limit for depositing amount in escrow account and explain with
the relevant provisions,
ii. what amount should be deposited in escrow account in this case?

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Questions 15
Govind Ltd. proposes to issue 20 lakh share warrants to its promotors. The share warrant
gives an option to buy shares at a predetermined price. The price trend of the Company’s
share in the stock market is given below:
• Closing price on the relevant date: Rs.250.
• The average weekly high and low of the closing price during the 26 weeks preceding
to the relevant date: Rs.275.
• The average weekly high and low of the closing price during the 2 weeks preceding to
the relevant date: Rs.280.
You are required to:
(a) Identify the minimum price at which share warrants should be issued; and
(b) Calculate the amount payable by the promoters at the time of allotment of the
warrants.

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Question 16
RP Ltd. Is planning to issue an IPO in 2019 for which a draft offer document is proposed
to be filed in September, 2019. The following data is available regarding the company:
2015-2016 2016-17 2017-18
Net Tangible Assets = 5.00 8.00 7.00
Monetary Assets = 1.00 3.00 3.00
Net Worth = 3.00 4.00 5.00
(i) Advice the company whether they can proceed with the IPO
(ii) Will your answer be different if value of monetary assets is Rs. 4 crore in 2016-17?
(iii) How will you deal with the situation, if company has monetary assets of Rs. 5 crore
in the year 2017-18 ?

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Questions 17
The Nifty Index was trading at 11025 on 1st February, 2019 on NSE. The put option of
10800 with expiry date of 28th February, 2019 was available at Rs.50 per lot and the call
option of 11300 with same expiry date was available at Rs.30 per lot. The size of one lot
of Nifty is 75.
Ganesh who is regular trader in stock market purchased 2 lots of put options of 10800
and one lot of call option of 11300. On 22nd February, 2019, the Nifty Index was trading
at 10850. Ganesh decided to square off all these transactions. At the time of squaring off,
the call option of 10800 could be sold at Rs.80 and put option could be sold at Rs.5.
Calculate the Net gain/loss from this transaction considering the transaction charges
including brokerage is fixed at Rs.100 per lot (buy or sale).
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Question 18
A Mutual fund has shown Net Asset Value (NAV) of Rs.11.60 at the commencement of the
year. At the end of the year NAV increases to Rs.12.50. Meanwhile, the Fund distributes
Rs.0.75 as dividend and Rs.0.85 as capital gains.
(i) Calculate the fund’s return during the year.
(ii) Had these distributions been re-invested at an average NAV of Rs.12.20, what is the
return for 400 units ?

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Question 19
TechNo Grow Ltd. Approved buy back proposal of 200000 Equity share capital in its
Board meeting on 25th April, 2019. The record date was fixed on 25th June, 2019. The
closing market price on NSE as on 25th April, 2019 and 25th June, 2019 was Rs.2640.40
and Rs.2514.05 respectively. Determine the number of equity shares which is eligible to
be tendered by Small Shareholder Category (rounded off to lower whole number).

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Question 20
A Mutual Fund having 300 units has shown Net Asset Value (NAV) of Rs.8.75 and Rs.9.45
at the beginning and at the end of the year respectively. The Mutual Fund has given two
options :
(i) Pay Rs. 0.75 per unit as dividend and Rs.0.60 per unit as capital appreciation; or
(ii) These distributions are to be reinvested at an average NAV of Rs.8.65 per unit
What difference it would make in terms of return available and which option is preferable
?

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Question 21
M/s Highspeed Ltd. manufacturing a car components for leading car manufacturer. Its
public issue of Rs.500 crore was fully subscribed. The public issue money ought to be
utilized for setup an assembly-line for the existing business. Out of Rs.500 crore, the
company spent Rs.400 crore for assembly-line. The management consultant, hired for
Business Process re-engineering has suggested to invest balance amount to setup bike
components manufacturing unit. You, being company secretary of the company, advise
on the opinion of management consultant by referring provisions of SEBI Guidelines.

Answer:
Question 22

Answer:
Question 23
The financial data of a listed company as on 31st March, 2018 are as follows :
Authorized equity share capital Rs.10 crore
(1 crore shares of Rs.10 each)
Paid-up equity share capital Rs. 5 crore
General reserve Rs. 3 crore
Debenture redemption reserve Rs. 2 crore
The Board of directors of your company passed resolution by circulation for buy-back of
shares to the extent of 9% of the company's paid-up share capital and free reserves. You
are required to examine the validity of the proposal with reference to the provisions of
the SEBI Regulations.

Answer:
Question 24
You are required to compute the profit/ loss for each investors in below option contracts
:
(i) Mr. X writes a call option to purchase share at an exercise price of Rs.60 for a premium
of Rs.12 per share. The share price rises to Rs.62 by the time the option expires.
(ii) Mr. Y buys a put option at an exercise price of Rs. 80 for a premium of Rs. 8.50 per
share. The share price falls to Rs.60 by the time the option expires.
(iii) Mr. Z writes a put option at an exercise price of Rs.80 for a premium of Rs.11 per
share. The price of the share rises to Rs.96 by the time the option expires.
(iv) Mr. XY writes a put option with an exercise price of Rs.70 for a premium of Rs.8 per
share. The price falls to Rs. 48 by the time the option expires.

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Question 25

A mutual fund has a NAV of Rs.11.50 at the beginning of the year. At the end of the year
NAV increases to Rs.12.10.
Meanwhile the fund distributes Rs.0.80 as dividend and Rs.0.70 as capital gains.
(i) What is the fund’s return during the year ?
(ii) Had these distributions been re-invested at an average NAV of Rs.11.80, what is the
return for 200 units ?

Answer:

Question 26
Naman had executed following trades on Gama Ltd. stock:
(i) Purchased one 3-month call option with a premium of Rs.25 at an exercise price of
Rs.530.
(ii) Purchased one 3-month put option with a premium of Rs.5 at an exercise price of
Rs.430.

The lot size is 100 share per lot and the current price of Gama Ltd. stock is Rs.500.
Determine Naman’s profit or loss, if the price of Gama Ltd. stock after 3 months is :
(a) Rs.500
(b) Rs.350.

Answer: